(Adds details, analyst comment, share movement, background)
Oct 7 (Reuters) - IG Group Holdings Plc has changed the terms of client accounts that were affected by a surge in the Swiss Franc earlier this year after intervention from the UK’s Financial Ombudsman Service (FOS).
IG Group said the FOS agreed that the online trading platform had acted in accordance with terms and conditions of a client agreement during the Swiss franc’s surge on Jan. 15.
The FOS, however, added that a contract that was beneficial to clients would have been more reflective of the underlying market liquidity during unprecedented market circumstances, IG Group said in a statement.
In 25 of the most turbulent minutes in markets in years, the Swiss franc soared more then 40 percent against the euro before giving back half its gains, after the Swiss National Bank scrapped its three-year-old cap on the franc versus the single currency.
IG Group said it had accepted the FOS’ determination and adjusted the client account in this particular case, and applied the same beneficial finding to all other affected client accounts.
The company said on Wednesday that the additional financial impact would be about 1 million pounds.
Some of IG Group’s clients said earlier this year that the company had breached British rules by trading in its own interest several minutes before acting on behalf of clients during the Swiss franc surge in January.
The company confirmed in July that some clients had complained to Britain’s Financial Ombudsman, a first legal step that could yield awards of up to 150,000 pounds for successful complaints.
An IG spokesman said at the time that all trades done in frenzied activity after the removal of the franc cap were to manage client exposure.
The company had earlier flagged 30 million pounds ($45 million) in expected losses from the franc trades.
Numis analysts, however, say that the total cost would be significantly below the 30 million pound guidance.
“We also believe that this ruling could result in further bad debt recoveries as we suspect some clients were waiting for the ruling before making any payment,” the analysts said.
Shares in IG Group were down 0.9 percent at 757.5 pence at 0902 GMT on the London Stock Exchange. ($1 = 0.6552 pounds) (Reporting by Noor Zainab Hussain in Bengaluru; Editing by Gopakumar Warrier)